Dealing with debt: The high price of higher education

Kaley Kennedy would still be living in Nova Scotia if getting a university education hadn’t put her so far in debt.

Kennedy tried to remain in Halifax after graduating in 2010 with an arts degree in contemporary studies and social anthropology. But she struggled to get by for two years on contract work, mostly in the communications field.

Saddled with $34,000 in student loan debt, Kennedy made the decision two years ago to move back to her hometown of Toronto. She reluctantly said goodbye to her friends and then-partner after landing full-time work in the bigger city.

“It was just the $34,000 elephant in the room,” the 27-year-old says of her debt load.

“If I had graduated with $15,000 of debt instead of $35,000, I can imagine that I could have figured out how to make it work.”

Many recent graduates struggle with high debt loads, even though the federal and provincial governments have overhauled loan programs and poured millions into assistance programs in recent years.

The province says loan debt in Nova Scotia averaged $20,540 in 2013-14, taking into account university and college studies. That’s up 9.4 per cent from two years earlier.

Officials couldn’t say how that compares to national figures.

Students Nova Scotia, an umbrella group of seven student unions, says student loan debt levels in the province are about 35 per cent higher than the Canadian average. But that’s based on 2010 data reported by Statistics Canada.

However, student loan programs aren’t the only form of debt recent graduates are shouldering.

Victoria Gray of Halifax, who got her degree in May, has $40,000 in bank debt after earning an undergraduate science degree in nutrition. Not eligible for student loans, Gray funded her post-secondary education through a line of credit, plus help from her parents with living expenses.

Since finishing school, the 22-year-old has been working at two part-time jobs in the hotel and restaurant sectors. In September, Grey begins the one-year unpaid internship she needs to become a certified dietitian.

And she’s trying not to fret about her credit balance.

“It’s scary to think about. But the world runs on debt.”

The Halifax woman, who’s living at home again and plans to work part-time on top of her internship, expects it will take five to 10 years to get rid of the debt. Gray says her studies were worth it, and she enjoyed four years living in small-town Nova Scotia.

About half of post-secondary students must borrow, in some form or another, to pay for their education, according to a CIBC poll released this month.

By the time they finish, 73 per cent of students said they expected to owe more than $10,000, said a survey of 500 people across Canada. Forty per cent predicted that they would owe more than $25,000.

Two-thirds also expected to pay back that debt in five years or less.

Jamie Golombek, CIBC’s managing director of tax and estate planning, said that’s an admirable goal but may not be realistic.

“Once students graduate and start their jobs, assuming they get a job, if they move out on their own and have other goals like buying a car or maybe even starting a family, then it may be even harder to pay down that debt,” Golombek said from Calgary.

Worried graduates should talk to a financial adviser, who can help them come up with a plan to pay down debt, he said.

But student leaders say the problem graduates are having paying their education bill isn’t just a burden on students and their families but on society as well.

Student groups advocate for more upfront help, including lower tuition fees and a provincial assistance program based entirely on grants. The province says government has injected $180 million into student assistance over the last four years to help with education costs.

Kelly Lindenschmidt of Sydney has benefited from assistance programs but still fears he may have to leave Cape Breton because of his $41,000 loan amount.

The 31-year-old graduated this spring with an arts degree majoring in political science and a certificate in public administration. He’s been working part time at a convenience store, a job he says he landed by knocking on doors.

“I’m trying to stick it out,” says the Ontario native, who took a hiatus from university to work and earn a community college diploma before going back to finish his degree.

“But at the same time, as time goes on, it’s seeming more and more futile to do so.”

Lindenschmidt said he may have to move to the mainland or out west if his situation doesn’t improve soon because his student loan payments are set to resume in November.

An Ottawa-based economist who follows the student debt issue agrees that many graduates do struggle to pay their loans. But Saul Schwartz also says the majority will find work and be able to pay their bill over time.

“If you think about it, $25,000 is how much many borrow to buy a car,” says the professor in Carleton University’s school of public policy and administration.

Schwatz says student loan levels are high but have been stable or down slightly for almost a decade because of increased government funding.

The economist says the students most at risk of defaulting on loans are those who don’t finish their studies, or who take a private college program in a field with slim job prospects.

As for Kennedy, who was vacationing in Halifax this week, her reluctant move back to Toronto two years ago is paying off. Four years after graduating, she’s caught up on her student loan payments and has managed to cut her debt in half. But her plans to attend graduate school have been put on hold more than once.

Kennedy, who faces payments for six more years, hopes to be in a position to move back east again someday.

“I think at some point when my student loan is in a manageable place, I’ll make the leap to come back. But the reality is high tuition fees and student debt mean that lots of young people like me are making tough decisions.”